Mar. 11th, 2007

07:45 pm - Interesting discussion on Slashdot

If you follow the thread down, I think we both had some interesting things to say. The whole thing ended (at least so far) with this post by me:

I don't think that I have to choose. I don't think that lower production and reducing incoming disparity are inextricably linked.

In fact, I think that reducing income disparity in the US right now might result in a total increase in production. This is because I suspect as much as 80% (a number I have no support for, am pulling out of thin air and may be totally wrong about) of current profits for the top 5% of corporations represents money gained from them purposely creating inefficiency in the market that they can exploit.

But, to answer your question directly, despite me thinking that it's not actually relevant to the situation, I think there's a balance to be struck. I think there needs to be some checks to make sure the rising tide really is raising all the boats. I think some small sacrifice of growth rate is reasonable to make this happen. But I think that a major sacrifice of growth rate would be highly counterproductive.

But I repeat that I think that addressing the problem in the US currently might well result in an increase in the growth rate, not a decrease. I think many large corporations use their power to distort the free market to artificially favor themselves.

Do any of you have any thoughts on this? I would actually be really curious as to what mle292 thought. I bet she would think my whole power law log/log graph idea was completely bogus.

Comments:

I think it's funny that she uses Microsoft as an example of starting small. Bill Gates was from a wealthy family that was already established in the top tier of our society so Microsoft making it big did not really represent any rise of a little guy to the top. Also, as a company it was exploiting the pursuit of brand new technologies in a completely new market which is totally different than displacing a large corporation in something like insurance or car manufacturing, etc. It's just not a compelling example. Also, WalMart's major competition has long been local small businesses, not big companies, so I fail to see where that is a good example either.

I'm no economist or business major, but it strikes me that we've had a strong cultural shift from being supportive of small business and the American Dream of people being able to climb up the class ladder to a corporate society of worker bees where supporting big businesses for the sake of the economy and "productivity" is the order of the day. It doesn't even seem to matter whether the businesses are being run well or poorly as long as they have enough staff to create social dependencies they become citizens unto themselves who must be kept alive at our expense.

Would a change in income disparity be helpful to we individuals and to the market? I don't have any idea. However, with the advent of unsecured credit, which banks decided to offer for the well being of their corporate interests knowing full well it was going to be bad for their customers, and our new relationship with debt, would an increase in our incomes actually do anything? Would people use it in a way that enlivened the economy and enriched their lives, or just up the ante on their lifestyle? It seems really complex to me.

I hope you get more helpful on topic answers than I can come up with, but it was really fun to read your posts and think about this.

I hadn't really thought about the kind of market Microsoft was creating or how Walmart managed to get big. Those are really good points. You're right that neither is particularly indicative of the kind of class mobility I was talking about.